Kaplan University offers over 180 degree and certificate programs all available to military, veterans, and spouses of active duty members. In addition, several programs have been developed to complement specific military occupations or programs established by the military.

Open College at Kaplan University (OC@KU) offers individualized, affordable education that integrates technology and personalized service to help learners meet their career, academic, and personal goals.

Keep Your Organization From Going Down the Road to “Ethical Collapse”!

The corporate culture of an organization
is actually a reflection of the ethics of the people who work there! And where
does ethical behavior start? It starts with the executives and management of
the organization.

We have all heard of the “tone at the top”—employees will
follow the type of behavior they see modeled by top management.

How does your company or organization rate
as an ethical work environment? You can evaluate this using some indicators
developed by Marianne Jennings. Look at the employees and conditions at your
workplace to see whether you observe any of the following signs.

Pressure to maintain the numbers.
Management sends the message to meet earnings goals at any cost—the bottom line
is more important than an ethical environment.

Fear of reprisals. In
this instance, employees are afraid to “rock the boat” or draw attention to
themselves. This may be because the employee has seen others demeaned,
embarrassed, or treated as an outsider in prior situations.

Loyalty to the boss. Employees
may be mesmerized by the boss, or the CEO may be a central, dominating figure
in the organization.

Weak board of directors. Here,
the board of directors may be apathetic or inexperienced at recognizing
inappropriate accounting practices.

Conflicts of interest are ignored. Management
is reluctant to take action to address potential or blatant conflicts of
interest.

Innovative or cutting-edge practices
trump ethics. Employees believe the cutting-edge
technological advances of the company outweigh the ethical climate of the firm.

“Good” in some actions makes up for “evil” in
other actions. Because the company performs many good
community services, unethical practices in other areas are justified.

Do you recognize any of these signs in
your company or organization? Let’s look at these signs in relation to the
Fraud Triangle. As you remember from Cressey’s Fraud Triangle, three components
are needed, working together, for fraud to occur. These components are pressure
or incentive, opportunity, and rationalization.

We can see that Jennings’ signs fall into
place perfectly with the Fraud Triangle. The “pressure/incentive” signs are
pressure to maintain the numbers, fear of reprisals, and loyalty to the boss.
“Opportunity” signs are weak board of directors and ignoring conflicts of
interest. Not dealing directly with unethical situations creates more
opportunity for unethical behavior. The last two signs are types of
rationalizations—justifying unethical behavior because it is compensated for in
other ways—being on the cutting edge or also performing good works.

Any of these signs could indicate your
company or organization is at risk for ethical collapse. If any are present,
they can not only indicate a decline in ethics, but also can indicate an
increase in the risk of fraud. An ethical corporate culture, as we can see from
Jennings’ seven signs of ethical collapse, does indeed start at the top!

References

Jennings, Marianne M. (2006). The seven signs of ethical collapse: How to spot moral meltdowns in
companies before it’s too late. New York: St. Martin’s Press.

To learn more about establishing an ethical corporate
culture explore these links:

Kaplan University offers over 180 degree and certificate programs all available to military, veterans, and spouses of active duty members. In addition, several programs have been developed to complement specific military occupations or programs established by the military.

Open College at Kaplan University (OC@KU) offers individualized, affordable education that integrates technology and personalized service to help learners meet their career, academic, and personal goals.